Office of the Historian

893.102S/2304: Telegram

The Consul at Shanghai (Butrick) to the Secretary of State

Shanghai, October 1, 1940—3 p.m.
[Received 7:44 p.m.]

1012. Shanghai situation.

1.
The recently imposed additional restrictions on trade have had a serious effect on American import and export firms, notably those engaging in the petroleum products and businesses. These restrictions are discriminatory in effect and are doubtless part of a well considered plan to give Japanese economic control of this area. American interests will eventually be entirely driven out or forced to submit to Japanese terms.
2.
The activity and influence of the Japanese exerted through the Wang Ching-wei régime is increasing. The recent public utilities strikes in the International Settlement and those averted in the French Concession are politically inspired for the purpose of gaining control of labor through the General Labor Union, a Wang organ. The morale of the police of both the Settlement and the French Concession is being undermined by Wang agents. Efforts are being made to [Page 819] intimidate the judges and employees of the Chinese courts in the Settlement and Concession through assassinations and threats. “Mayor” Fu is putting heavy pressure on the “White” Russians to submit to the jurisdiction of Chinese courts outside the foreign areas or to special “arbitration courts”. The control of the property and administration of the customs houses in the French Concession has been taken over by the Wang régime and the Inspector General of Customs has been told that it will be necessary to “regularize” his position with the Nanking and Japanese authorities after the expected ratification of the Wang-Abe treaty.54 The activities of the Japanese gendarmes have greatly increased in the French Concession and to a lesser extent in the Settlement in the causing of arrests by the police of persons allegedly antagonistic to Japanese and Wang objectives.
3.
It is reliably reported that the Wang régime has by devious methods enlisted various leaders in Chinese educational circles and has gained substantial control of student organizations.
4.
With the weakened attitude of the French Concession, the Settlement authorities are finding it increasingly difficult to stop Japanese pressure. They have increased their censorship of the Chinese press friendly to Chungking and “overlook” censurable articles in the Chinese press favorable to Wang. The Japanese are attempting to have Japanese police officers assigned to the special branch of the municipal police which would result in giving the Japanese Government confidential information which it would use for its own ends. The Wang press has already referred to this branch as an adjunct to the British secret service. A high ranking official of the Settlement recently informed me that “there will be no more elections”. Unless the Japanese are assured of success in the elections, I think he is right.
5.
“Mayor” Fu has shown little inclination to implement the Fu-Franklin agreement regarding the policing of the western extra-Settlement roads in the spirit of the agreement, while the Miura-Franklin agreement for the [police] control of the northern area of the Settlement to [end?] the restrictive measures is apparently a dead issue.
6.
The action of the Japanese Government in the July 7th incident and the question of Sector B is not reasonable and reflects a determination to destroy American prestige and obtain complete economic and political control of Shanghai, which they consider “the heart of China”.
7.
On the arrival of the Japanese Consul General at Shanghai, Japanese local policy has on each occasion since hostilities began become [Page 820] more aggressive and the recent appointment of Minister Horiuchi to that position probably materially increased pressure against the Settlement authorities. However, the Japanese attitude in Shanghai will doubtless be dictated by Tokyo by expediency, and therefore I hazard the guess that Shanghai will be given a respite until the effect of the impact of the Rome-Berlin-Tokyo Axis55 has worn off somewhat within Japan and within the United States.
8.
[Here follows garbled paragraph in regard to making reports available to Navy Department officers.]

Sent to the Department. Repeated to Chungking, Peiping. Code text by airmail to Tokyo.

Butrick
  1. Signed at Nanking, November 30, by General Nobuyuki Abe and Wang Ching-wei, Foreign Relations. Japan, 1931–1941, vol. ii, p. 117.↩
  2. For summary of the Three-Power Pact signed at Berlin, September 27, see Foreign Relations, Japan, 1931–1941, vol. ii, p. 165.↩